Why to buy Banks now? | Stocks and Commodities

Why to buy Banking stocks now?

Markets are in correction mode all over the world.

The fear of corona virus is driving the markets crazy.

Dow fell 1191 points yesterday which is the highest point wise fall in the History of Dow.

This week Dow fell more than 10% which is the fastest 10% fall in the History of DOW.

For contra investors, this is the best time to buy some stocks.

At the same time, it is not good to buy in one go, may be 25% can be invested now.

Once decided to buy, which stocks to buy?

That is a million dollar question.

When I did some simple analysis, banking stocks seems to be good at this point of time.

I will analyse the Banking stocks one by one.

1. SBI:

SBI Card IPO is going to be a huge success. It commands 50% premium in Grey markets. Good price discovery in secondary markets will help SBI valuations. Not only SBI Card, SBI AMC became number 1 over taking HDFC AMC. Soon SBI AMC may also get listed. SBI Chairman himself said MArch quarter results will be very good due to Essar Steel resolution. In the recent fall SBI is holding.

2. HDFC Bank:

HDFC Bank is one of the strong Banks. HDFC Life has come to F&O. HDFC Life market cap is higher than Shree Cement market cap, which is recent entrant to Nifty 50, replacing YES Bank. So next time, if any stock leaves Nifty 50, HDFC Life may come to Nifty 50. That will help HDFC Group as a whole. Remember HDFC Bank ADR trades at 10 to 15% premium. HDFC is FII favourite, once Global cues turn better, HDFC Bank will do well.

3. Kotak Bank:

Kotak Bank equity dilution issue was resolved amicably between Kotak Bank and RBI. After that Kotak Bank has been out performing Bank Nifty. Basically it is a good bank which was not involved in lending to any suspicious groups. They focus more on retail loans.

4. ICICI Bank:

ICICI Bank has cleaned up the balance sheet and it has been doing very well for the last one year.
So in the coming quarters also, it is likely to do well. They also now focus more on retail loans.

5. IndusInd Bank:

This is one of the worst performing Bank for last one year. It has corrected nearly 50%. Yesterday RBI approved the Chairman tenure and today despite Nifty falling so much, IndusInd Bank is not falling much. However today it has hit 52 week low. Going forward, when markets stabilise, this stock may do well.

6. Axis Bank:

Axis Bank is another resilient bank, did not fall much in the recent fall. Max Financial merger may be a good thing for Axis Bank.

7. YES Bank:

After falling so much, it seems that YES Bank is stabilising between 30 and 40. So it is not likely to fall more as the worst seems to be factored in. However Futures trade at a deep discount to Cash price. So it will make sense to buy in Futures market.